TC Energy (TRP.TO)

Pipelines are a very good business in Canada. Highly regulated so profits are almost “baked in the cake“ when they take on some projects. Thinks the Keystone pipeline will go through, which would be positive development for Canada.

Just got a favourable ruling from the national energy board. Has done reasonably well but this is because of people looking for yield. He can’t justify paying 18 or 19 times earnings for a company that doesn’t have a lot of growth.

TRP has had a huge run and keystone may not be approved. TRP is fine with or without it but market may take it poorly. There is a virtue in taking profit and diversifying it may be a good idea.

Keystone XL has been hung up in the US political process. Very difficult to call. His guess is that it ultimately goes through because it makes sense. Even when it gets approved, it is going to take a while to have it come on line. Stock has been a fairly stable way to offer yield but he finds the stock expensive here relative to its growth potential.

He only has a small bit left but would be tempted to take a profit here. You are buying a company at over 2 times book value. Dividend is only 3.7%. It has had a great run but it frightens him. Approval of XL pipeline is built in to the price. If XL does not go through the stock could jump back.

Preferred D series 4%. A rate reset and a recent new issue. Possibly callable in April 2019 or it may get reset at 238 basis points of either the 5 year Canada or it can float above the BA rate at 238 basis points. Current yield of 3.91%. Yield-to-call (2019) is 3.56%.

Chart shows a steady uptrend from 2010. On a shorter-term basis, there’s no reason not to hold this one. A small breakout in the last few weeks is pretty positive.

There is a revolution happening in North American energy production and they are finding oil everywhere. We have a problem in that the pipelines are all going in the wrong direction. Feels you can buy this one and Hold it. Pays a nice dividend. Nice, long-term play.

Taking a little profit off may not be a bad idea. If they get some of their pipeline approvals they may have to finance it. You could buy some back on dips.

Dollar pull backs on stocks is normal course. He likes it but it is pretty fully priced and has priced in keystone, which is not a sure thing, so it is due for a pull back here. At the end of March, Obama is scheduled to say Yea or Nay.

(Top Pick Feb 06/12, Up 21.35%) Getting pretty fully valued, but he likes it as a value place in markets. 4% yield and some growth over next 5 years. Keystone is important over the next little while. Thinks there is a couple of dollars left in it.

Had a huge move of late. Likes the outlook for it very much. Waiting for the Keystone decision. Have a huge capital expenditure program on their plate. Wouldn’t be buying it at these levels. His target price is in the very low $50’s.

$37.34 model, -23% from closing price. He finds all utilities expensive here. If we get a great rotation from bonds into equities, this group will be hurt.

He just divested the other day for no other reasons than he had a lot of profit. He wanted to protect against a gap recently. Thinks this is a good long term name but he thinks he can get it back cheaper: $43-$45

With the White House’s outlook on the environment, does the US really need our gas/oil through this pipeline or will there be a debate and a Hold on it? Hopes Obama approves Keystone. He should, given the shortage of heavy oil in the Gulf refineries. Also, the possibility of getting heavy oil from more friendly sources than Venezuela. If he disapproves, this stock will get hit a bit. However, they are doing some very interesting things in BC with the line to the coast for the shipment of natural gas for conversion to LNG. There is also transmission of oil in most of its pipeline to the east.